Sunday, August 31, 2014

We are being constantly told by the talking heads of the media that the economy is recovering. And as a consequence, we should all feel good about the state of affairs of our domestic economy.

Not so fast.

After a dismal first quarter of negative economic growth- blamed on cold weather- the economy is still struggling to get traction. So far, consumer spending has grown this year by 1.8%, and when you factor in the effect of inflation, which is estimated to be 5% without the adjustments made in the calculations by the government, real growth is negative.

Here are some facts from the latest Commerce Department report that should shed some light on our current situation:

25% of all personal income in this country is either a transfer from the government to individuals or income from a government job. That is $3.7 trillion taken from producers and given to those that do not produce a product or service in the private sector. The relentless growth of spending on social programs is projected to increase that percentage to 30% by the year 2020.

Real personal income increased by 2.6% last year, but when factoring in the real inflation cost of 5%, real income has declined 2.4%.

Government policy that has produced a 0% interest rate environment is estimated by the Commerce department to cost savers $500-700 billion per year. This has an obvious negative impact on spending and consumer confidence.

Consider the following information from the Commerce Department:

Notice that those that should be entering their prime earning years have actually seen their incomes decline. Is it any wonder that the economy is struggling?

Those that would typically spend as they start their families and as they grow have seen their incomes fall since the end of the recession. We shouldn't be surprised that consumer confidence is weak since the facts do not support an environment that would lead to growing confidence.

But wait, the markets are at record highs, so everything has to be good, right?

Well...

There is a huge divergence between the performance of the world's stock markets and the projected growth of the world's economies.

The performance of the S&P 500 in this country has not been related to the number of people that are employed.

So what is driving the market?

The market has risen almost in lockstep with the expansion of the Federal Reserve's balance sheet.

The Fed's attempt to drive the economy has failed miserably, even with an additional $4 trillion new dollars printed over the past five years. The policies of the Fed have not benefitted Main Street or middle class Americans.

The reality is that the market does not reflect the underlying weakness of the economy or the struggle that most Americans face.

But it eventually will.

How it plays out will be... interesting. Either the Fed will continue its obviously flawed policies, which will sooner or later debase our currency and fuel significant inflation. Or the Fed will allow normal market forces to begin to correct the excesses in our system, which will cause a correction in the markets.

Either way, it will painful.

Main Street, and middle class Americans, are telling policy makers that things aren't right and that the policies coming out of Washington aren't working.

Saturday, August 23, 2014

Over the past decade, the American middle class has been decimated. The number of people out of work is over 97 million; median wages have fallen over the past 5 years; the rate of home ownership has fallen for 8 straight years; and the average household wealth has fallen precipitously.

Even if you have not lost your job, the cost of living is going up while wages decline, putting greater pressure on many families.

There is no doubt the middle class is struggling. Here are some troubling facts:

According to a recent New York Times study, the average American household is now worth 36% less than a decade ago.

One out of every seven Americans now relies on food banks to feed their family.

One out three Americans now has a debt that is in collections.

According to CBS Marketwatch, 52% of American homeowners cannot afford the house in which they are currently living.

One out six American men between the age of 25-54 do not have a job.

More than 50% of all working Americans make less than $30,000 per year.

One out of every five children in the U.S. lives below the poverty line.

One million public school children are homeless, according to a study by the Washington Post.

The federal government paid more than $2 TRILLION in public assistance last year.

At one time, the U.S. had the most prosperous middle class in the world. Now, the average wealth of an adult American has fallen to 19th in the world.

Why is a healthy middle class important?

Middle class spending powers the U.S. economy. With families being crunched financially, spending by the middle class has fallen significantly, which means that our economy is struggling to grow and add quality jobs. Without quality jobs, middle class consumers are loath to spend. The resulting downward spiral is one that is difficult to break.

A healthy and thriving middle class provides economic mobility, especially for those that are not in the middle class and are striving to move upward economically. With a dearth of quality jobs and a contraction in the middle class, it becomes more difficult for upward mobility. Limited job opportunities for upward mobility constrains those that have the desire and drive to move up.

Job creation in this country comes from small business, which are typically owned by entrepreneurs in the middle class. 85% of all jobs created in this country are in companies that employ 50 people or less. With growing financial headwinds, job creation from this sector has stagnated and declined. The result is an economy that is not growing by adding quality jobs.

As you can see, a healthy middle class is essential to a healthy economy in this country. Right now, the middle class is under tremendous pressure financially, possibly as great as it has faced since the great depression.

Reversing these negative trends is going to take time and political will. Rather than serving narrow interests, our elected leaders are going to have to change course and create an environment where the middle class can thrive. this means cutting government spending and taxes; making it easier for businesses to add new jobs by rolling back onerous regulations and laws, including Obamacare; and removing incentives to be dependent on the government.

If we do not change course, our economy is going to continue to decline.

Tuesday, August 19, 2014

The new Ford Ice Center is scheduled for a mid-September grand opening, and hockey in Middle Tennessee is going to benefit with the addition of this state of the art facility. The center has two sheets of ice, exceptional locker room facilities, and is already proving to be a draw to hockey teams from around the country.

The Center is located on a part of the old Hickory Hollow mall site.

I had an opportunity to tour the facility with Predators EVP Chris Parker, who has been the point man for the build out. Here are some pictures from that visit:

The center has been built in a partnership with the government of Nashville. The City will own the facility and the Predators will provide the management. This is a view of the front of the facility on the left. On the right is a new Nashville library and recreation facility.

The city is putting in exercise fields and a walking/running track that will be shared by the city owned rec center and Ford Ice. The hockey staff will use these fields for outdoor off-ice training.

The interior of the facility is open and spacious. This view is looking from the information desk back toward the front entrance. The Perani Pro Shop is on the left and at the front entrance, and will be an excellent addition for the hockey community.

The information desk is on the right and this is looking north toward the concession area. The concession area will provide indoor and outdoor seating. As you can see by the ladders and the punch lists taped to the wall, there is still a lot of work going on throughout the facility.

A closer look at the concession area. The facility has lots of windows and natural lighting.

The view behind the information desk. They were stocking the skates that can be rented for public skating sessions.

Opposite the pro shop and just inside the front entrance is a dedicated skills area. This area will allow players to work on their shot and puck handling on synthetic ice. A worker is installing the synthetic ice surface.

This is the south rink. The lighting in both rinks is exceptional and stands have been installed in the south rink that currently can seat about 350 fans. Maximum capacity for games on the south rink can go as high as 800, and the north rink can hold at maximum about 1100. In both cases, this would be the seating capacity and standing room crowds. Dressing rooms for teams are just off the rink, and there are a total of 8 dressing rooms to accommodate teams involved in tournaments.

The dressing rooms are large and give the players plenty of room to store their gear and personal effects. Several of the dressing rooms have a shared door which will allow the rooms to be combined to accommodate larger groups. Each dressing room has its own shower and rest room facilities.

The facility is two story, and it has upstairs viewing areas that offer a full view of the ice. There are connections for computers, tablets, and cell phones placed along the viewing area for use by scouts and coaches.

There are private rooms upstairs that can be used by coaches, scouts, and out of town teams during tournaments. Each room can be set up to meet the needs of its occupants. As you can see, these rooms also over look the ice

There are also meeting rooms and party rooms upstairs. they have moveable walls, which you can see on the back wall, to accommodate groups of various sizes.

Hockey isn't the only on-ice activity that will be conducted at the Center. Scott Hamilton will have his skating school housed there, and the Olympic gold medal winner will be working with figure skaters from all over the country. In addition to their on-ice training, these skaters will work off ice on their choreography and moves. This is a training room for the figure skaters that has mirrors so they can observe their movements as well as other training equipment that will be installed.

This is a view of the side of the facility facing the library/rec center. You can see the windows of the pro shop on the left. At the far right, the gold columns are where the outdoor seating for the concession area will be located.

This graveled area will be used to display Ford trucks and cars in front of the Center. The entrance is at the far right in this picture under the gold roof.

This may look like excess construction material piled up, but it's not. Those are dasher boards that will be set up outside the arena on this concrete slab to make an outdoor half rink for roller hockey.

One of the shiny new Zambonis in the Zamboni pit. The center has dehumidifiers for each rink and uses a top of the line ammonia system for the chillers.

This first class facility is already attracting national attention. It will host a 32 team men's tournament in the fall and is expected to host hockey camps that will bring in players and scouts from all over the U.S. and Canada.

In addition to hockey activities, Scott Hamilton's Skating School is expected to draw world class athletes for his training.

Attracting elite hockey teams and world class skaters requires a first class facility.

Nashville now has that in the Ford Ice Center.

Walking through, it is quickly apparent that a lot of thought went into the design and construction of the Center. The Ford Ice Center is a facility is a strong statement about the growth of hockey in Nashville and Middle Tennessee and the commitment of the Predators and the City to continue to nurture that growth.

Sunday, August 17, 2014

Zombies are all the rage among science fiction aficionados. The undead walk among us, according to the lore, searching for brains to eat.

Which means that most liberals are safe.

But I digress.

While the notion of zombies is good fodder for science fiction lovers, I would submit that there are real zombies among us.

These zombies do not have decaying skin, shuffle when they walk, and seek to devour the living.

No, these zombies are government entities and programs that refuse to die long after they should have departed the land of the living.

Want an example?

Take the U.S. Postal Service. In their fiscal third quarter ending June 30, the U.S.P.S. increased revenue to $16.5 billion, a 2% increase. And on the surface that sounds good. Until you consider that their costs increased 9% in the same period to $18.42 billion due to increased fuel costs and labor cost increases.

The Postal Service employs 627,000 people, which means that it is currently losing $12,760 per worker.

Now, friends, if this was a private sector company, do you think it would stay in business very long with this financial situation?

Yet the Postal Service continues on its merry way, supported by you and me as taxpayers.

Zombie programs like the Post Office run at a loss- it consumes more than it produces. And those losses are paid for in our tax dollars that these zombie programs consume like the brains of the living and their desire for more brains, uh, dollars is insatiable.

The reason zombie programs like the Postal service can exist in the government sector is that the government can take money from productive citizens and businesses by force through taxation and onerous penalties. Or they can print more money.

Or do both.

And that is why these zombie programs never die.

Now fans of the zombie genre know that the way to kill a zombie is with a head shot. Shoot them right through the head.

So how do we kill zombie government programs?

The head shot necessary to terminate those programs is accountability. The zombie programs will not be accountable, but we can hold our elected representatives accountable for their spending. We who are not among the undead must make our elected leaders accountable for their spending decisions and how our tax dollars are used. Fail to be accountable for spending and you join the ranks of the former government employees.

If we fail to engage and hold our representatives accountable, the zombie horde is only going to grow.

Friday, August 8, 2014

One of the conceits of those in power in Washington is the belief that as elected leaders and bureaucrats they know better what is best and right for you and me. This is manifested in the desire to consolidate power for daily decisions in the halls of government.

We are seeing it play out in healthcare, environmental laws and regulations, and in the myriad of rules that are enacted by Congress and the gargantuan bureaucracy in Washington.

The illusions and misconceptions of those that think they know better how you and I should live our life results mostly in costly nuisances.

Sometimes, they are disastrous.

The conceit of central planning fails because of three reasons: first, they believe they know the exact state of the community for which they are planning (the wants, desires, resources, and capabilities); second, they believe they know what future is best for you and me; and perhaps the biggest conceit of all, they believe they can create that future.

F. A. Hayek, the noted economist, called these beliefs "the fatal conceit, the belief that man can shape the world according to his wishes."

Now there is no doubt that each of us plans for our future. We establish goals as to where we want to be financially, where we want to live, what kind of job we want to have. Sometimes, those goals are achieved.

Sometimes, we have to adjust our goals because of circumstances.

Yet when we make those adjustments, they are still made with our best interest in mind.

The pretension of the central planner is that he knows a better future for you and me. And these central planners pursue their objectives with ferocious tenacity.

Central planners presume to know not only what you and I want, but more dangerously, what you and I should have.

Even when central planning is ruthlessly applied, there is no success. We have yet to achieve a "workers paradise" even though the Soviet Union spent 70 brutal years trying to do so. We have failed miserably and wasted billions of dollars in the War on Poverty. We are no where close to winning the War on Drugs. Or Crime. Or Terror.

Life is not so rational that it lends itself to the heavy hand of a naïve social engineer or bureaucrat in Washington.

Now make no mistake- we can plan and do some things more efficiently in a centralized manner. I am glad we have the best military in the world and it is controlled centrally. I am glad we don't have to organize our defenses at the state or city level. We can design safely roads and bridges because of planning and standardization.

But we cannot design economies. Or families. Or lifestyles.

Yet we persist in trying, even though the track record is one of miserable failure.

Central planning, to the extent that is effective, is repulsive to individual freedom. The more power the government grabs, the less freedom that you and I have. The more power that government takes, the fewer choices that you and I will be able to make.

This is the battle that is playing out now in our country. We have a government that is more than willing to usurp our freedom for their control over our lives. It is a matter of power over our future being taken from you and me and centralized in the hands of a nameless, faceless bureaucrat. While the battleground that is getting the most attention is healthcare, it also plays out in environmental laws that restrict the use of our property; economic measures that debase our currency and ultimately our standard of living; and numerous laws that limit our freedoms.

I will vehemently dispute any bureaucrat that thinks he knows better what is good for me regarding my health, finances, family, or occupation.